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Action on insurance policy. Emanuel Superior Court. Before Judge Humphrey.
FELTON, Chief Judge.
1. Where an insurance policy provides that the furnishing of a proof of loss within a time stated shall be prerequisite to the filing of an action for a loss under the policy, in an action for a loss under the policy it is not necessary to allege the filing of a proof of loss when the petition alleges an absolute refusal to pay during the time provided for filing a proof of loss.
2. An allegation of bad faith and prayer for damages and attorney's fees is not demurrable where the allegation is that there was a failure by the insurance company to pay within sixty days after a demand for payment made after a final adjudication of liability of the company in a declaratory judgment action filed by the company to have determined its liability under the policy.
3. In the event of a finding that the company refused in bad faith to pay the loss under the policy, attorney's fees in the case against the insurance company to recover the loss are the only ones authorized by law.
On July 16, 1962, T. C. Hunnicutt brought this action against South Carolina Insurance Company to recover damages for an automobile collision loss under an insurance policy, liability for which loss had been established by a declaratory judgment, affirmed by this court in South Carolina Ins. Co. v. Hunnicutt, 105 Ga. App. 257 (124 SE2d 315). He also sought $5,000 attorney's fees and a 25% penalty under Code Ann. 56-1206.
The petition alleged, in substance: That the defendant company was notified of the loss within an hour of its occurrence on December 2, 1960; that the defendant denied liability under the policy on January 31, 1961, and on February 14, 1961, after the plaintiff had signed a non-waiver form and had made numerous demands for payment; that while the. defendant's declaratory judgment action was pending, it notified the plaintiff that although it would file defenses in actions for damages filed against the plaintiff by two of the passengers in the insured vehicle at the time of the collision, it would not pay any judgment entered against the plaintiff; that following the denial of the defendant's motion for a rehearing by this court on January 29, 1962, the plaintiff, on March 29, 1962, again demanded payment under the policy and delivered to the defendant's attorney, at his request, the original medical bills, which were never returned to the plaintiff; that on April 14, 1962, the defendant's adjuster requested and was given by the plaintiff these same medical expense figures, and was told that the defendant's attorney had the bills; that on May 7, 1962, the defendant settled the cases pending against the plaintiff; that no payment or offer of payment by the defendant has been received by the plaintiff; that the defendant has acted in bad faith in the following particulars: in refusing to pay the plaintiff's covered losses after the several demands were made, since the defendant had actual knowledge of the facts creating the exclusion relied upon to void the policy and, with such knowledge, accepted and retained increased premiums charged by it for such excluded use; in filing its declaratory judgment action after denying liability; in failing and refusing to indemnify the plaintiff for the covered losses within 60 days after two demands were made, both of which having been made after liability had been established by this court's affirmation of the declaratory judgment. Although the policy provided that the insured shall "file with the company, within 91 days after loss, his sworn proof of loss in such form and including such information as the company may reasonably require . . ." and that compliance with all the terms of the policy is a condition precedent to the bringing of an action against the company, no such filing is alleged.
The defendant's general demurrer on the ground that the "petition fails to set forth a cause of action either in law or in equity" and its five special demurrers were overruled, to which judgment it excepts.
1. "Where the plaintiff's right to recover on an insurance contract depends upon a condition precedent to be performed by him, the failure of his petition to allege the performance of such condition precedent, or allege a sufficient legal excuse for its nonperformance, renders said petition subject to general demurrer. Delta Ins. Co. v. Wood, 99 Ga. App. 58 (107 SE2d 693)." Equitable Life Assurance Society v. Hollingsworth, 103 Ga. App. 505 (119 SE2d 725); Harris v. Towns, 106 Ga. App. 217 (3) (126 SE2d 718); Reserve Ins. Co. v. Campbell, 107 Ga. App. 311. Under the ruling in Reserve Ins. Co., supra, the general law as to the legal consequence of an absolute refusal to pay within the time allowed for the filing of proofs of loss still remains of force despite the omission of such provision in the Insurance Code of 1960 (Ga. L. 1960, pp. 289, 670), now designated as Code Ann. 56-2427.
Was there an absolute refusal by the insurer to pay? It is alleged that it denied liability on the policy on two separate occasions following the loss within the 91-day period in which proof of loss is required to be filed. The fact that there may have been sufficient doubt on the part of the defendant company as to its liability under the policy to prompt it to bring a declaratory judgment action to ascertain its liability would not prevent its refusals to pay, made prior to the filing of that action, from being absolute. The plaintiff could not have known that the defendant intended to file the declaratory judgment action, and even if he had known it he would have acted at his own peril by awaiting the outcome of the action before making his demand, since the 91-day period would have expired. The refusals to pay were not merely conditional ones, based upon the plaintiff's failure to file proof of loss or upon the fact that a declaratory judgment action to determine the defendant's liability was pending. Under the allegations of the petition, which must be taken as true on demurrer, the defendant denied liability under the policy, which a jury could find amounted to an absolute refusal to pay sufficient to waive its requirement of filing of proofs of loss.
2. The special demurrer to the allegations of the defendant's acts of bad faith is without merit. The jury might find that the failure of the insurance company to pay within sixty days after the demand for payment, made after the final adjudication of liability of the company in its declaratory judgment action constituted bad faith. The contention of the plaintiff in error, that no final judgment in the declaratory judgment action was shown because of the failure of the defendant in error to allege that the remittitur from this court had been made the judgment of the trial court, is also without merit. Even omission to enter the remittitur on the minutes of the trial court does not alter or modify the legal effect of the judgment of affirmance. Forrester v. Pullman Co., 66 Ga. App. 745 (3) (19 SE2d 330); Harrison v. Harrison, 208 Ga. 70 (3) (65 SE2d 173); Bird v. Riggs, 210 Ga. 297 (1) (79 SE2d 803).
3. One special demurrer is directed to the prayer in paragraph 43 of the petition, which allegedly claims attorney's fees for defending the declaratory judgment action. In the preceding paragraph, the plaintiff prays for "all reasonable attorney's fees for the prosecution of the case against the defendant," which we construe to mean the present suit. Even if the prayer be construed so as to include attorney's fees for defense of the declaratory judgment action, such damages could not be recovered, since Code Ann. 56-1206 provides that an insurer whose refusal to pay has been found to have been in bad faith shall be liable to pay the holder of the policy ". . . all reasonable attorney's fees for the prosecution of the case against the insurer." (Emphasis supplied). The declaratory judgment action was not a case against the insurer, but by the insurer, and it involved other parties in addition to the plaintiff and the defendant. This special demurrer is without merit.
The allegations were sufficient to state a cause of action for the damages sought; therefore the court did not err in its judgment overruling the demurrers to the petition.
Judgment affirmed. Eberhardt and Russell, JJ., concur.
Rountree & Rountree, W. E. Rountree, contra.
Richardson, Jones & Doremus, Ogden Doremus, Williams & Smith, Felix Williams, for plaintiff in error.
Friday May 22 22:31 EDT

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